Economic calendar for the week 24.07.2023 – 30.07.2023

07:30 EUR Manufacturing and Services PMI of the German economy according to S&P Global. Composite PMI of the German economy according to S&P Global (preliminary release)

Manufacturing and service PMIs are important indicators of the business environment and the overall health of the German economy. These sectors of the economy form a significant part of Germany’s GDP. A result above 50 is considered positive and strengthens the EUR, while one below 50 is considered negative for the euro. Data worse than the forecast and / or the previous value will have a negative impact on the euro.

Previous values:

     Manufacturing PMI: 40.6, 43.2, 44.5, 44.7, 46.3, 47.3, 47.1, 46.2, 45.1, 47.8, 49.1, 49.3, 52.0, 54.8, 54.6,     Services PMI: 54.1, 57.2, 56.0, 53.7, 50.9, 50.7, 49.2, 46.1, 46.5, 45.0, 47.7, 49.7, 52.4, 55.0, 57.6, 56.1, 55.8,     Composite PMI: 50.6, 53.9, 54.2, 52.6, 50.7, 49.9, 49.0, 46.3, 45.1, 45.7, 46.9, 48.1, 51.3, 53.7, 54.3, 55.1, 55.6.

Forecast for July: 41.0, 53.1, 50.3, respectively.

08:00 EUR Manufacturing and Services PMI of the German economy according to S&P Global. Composite PMI of the Eurozone economy according to S&P Global (preliminary release)

PMI in the manufacturing sector and in the services sector are important indicators of the state of the entire European economy. A result above 50 is considered positive and strengthens the EUR, while one below 50 is considered negative for the euro. Data worse than the forecast and / or the previous value will have a negative impact on the euro.

Previous values:

     Manufacturing PMI: 43.4, 44.8, 45.8, 47.3, 48.5, 48.8 (in January 2023),     Services PMI: 52.0, 55.1, 56.2, 55.0, 52.7, 50.8 (in January 2023),     Composite PMI: 52.8, 54.1, 53.7, 52.0, 50.3, 49.3 (in January 2023).

Forecast for July: 43.5, 51.5, 49.7, respectively.

08:30 GBP Manufacturing and Services PMI. Composite Manufacturing PMI of the UK economy according to S&P Global (preliminary release)

Manufacturing and services PMIs are important indicators of the state of the British economy. The services sector employs the majority of the UK’s working-age population and contributes approximately 75% of GDP. The most important part of the services industry is still financial services. If the data turns out to be worse than the forecast and the previous value, the pound is likely to fall sharply in the short term. Data better than the forecast and the previous value will have a positive impact on the pound. At the same time, a result above 50 is considered positive and strengthens the GBP, while one below 50 is considered negative for the GBP.

Previous values:

     Manufacturing PMI: 46.5, 47.1, 47.8, 47.9, 49.3, 47.0, 45.3, 46.5, 46.2, 48.4,     Services PMI: 53.7, 55.2, 55.9, 52.9, 53.5, 48.7, 49.9, 48.8, 48.8, 50.0, 50.9, 52.6,     Composite PMI: 52.8, 54.0, 54.9, 52.2, 53.1, 48.5 (in January 2023).

Forecast for July: 46.1, 53.0, 52.4, respectively.

13:45 USD Manufacturing and Services PMI (from S&P Global). Composite PMI (preliminary releases)

PMIs in the most important sectors of the US economy prepared by S&P Global are important indicators of the state of the US economy as a whole. A result above 50 is considered positive and strengthens the USD, one below 50 is considered negative for the US dollar.

Previous values of the PMI indicator:

          Manufacturing PMI: 46.3, 48.4, 50.2, 47.3, 46.9, 46.2, 47.7, 50.4, 52.0, 51.5,          Services PMI: 54.4, 54.9, 53.6, 50.6, 46.8, 44.7, 46.2, 47.8, 49.3, 43.7, 47.3, 52.7, 53.4, 55.6.          Composite PMI:53.2, 54.3, 53.4, 52.3, 50.1, 46.8 (in January 2023).

Tuesday, July 25

08:00 EUR Bank Lending Survey in the Eurozone

The survey of the state of the bank lending system is conducted by EU experts in the financial sector 4 times a year. The main purpose of the study is to obtain extended information about the conditions of bank lending in the Eurozone.

The data obtained are used by the ECB management in making decisions on the bank’s monetary policy. This report could cause increased volatility in the euro quotes and in the European stock market at the time of its publication if it contains unexpected conclusions about the conditions for lending to businesses and households in the Eurozone.

Wednesday, July 26

01:30 AUD RBA core inflation index by trimmed mean method (for the 2nd quarter). Consumer Price Index (for the 2nd quarter)

This indicator is published by the RBA and the Australian Bureau of Statistics. It reflects the dynamics of retail prices for goods and services included in the consumer basket. The simple trimmed mean method takes into account the weighted average kernel, the central 70% of the index components. Previous index values: +1.2% (+6.6% YoY) in 1Q 2023, +1.7% (+6.9% YoY) in Q4 2022, +1.8% (+6.1% YoY) in Q3, +1.5% (+4.9% YoY) in Q2 2022 +1.4% (+3.7% YoY) in Q1 2022, +1.0% (+2.6% YoY) in Q4, +0.7% (+2.1% YoY) in Q3, +0.5% (+1.6% YoY) in Q2, +0.3% (+1.1% YoY) in Q1 2021.

According to the forecast, it is expected that the value of the indicator for the 2nd quarter of 2023 will be +1.1% (+6.0% in annual terms).

While this is still a weak result, the data points to mounting inflationary pressures. If the value of the indicator turns out to be worse than the forecast, this is likely to have a negative impact on the AUD. The growth of the indicator above the forecast should have a positive impact on the AUD in the short term.

The Consumer Price Inflation Index (CPI) published by the RBA and the Australian Bureau of Statistics evaluates the dynamics of retail prices for goods and services in Australia. CPI is the most significant indicator of inflation and changes in consumer preferences. A high result is positive for the AUD, while a low result is negative. Previous values: +1.4% (+7.0% YoY) in Q1 2023, +1.9% (+7.8% YoY) in Q4 2022, +1.8% (+7.3% YoY) in Q3, +1.8% (+6.1% YoY) in Q2 2022, +2.1% (+5.1% YoY) in Q1 2022, +1.3% (+3.5% YoY) in Q4, +0.8% (+3.0% YoY) in Q3, +0.8% (+3.8% YoY) in Q2, +0.6% ( +1.1% YoY) in Q1 2021.

According to the forecast, it is expected that the value of the indicator for the 2nd quarter of 2023 will be +1.0% (+6.2% YoY).

The Australian central bank’s CPI inflation target is in the range of 2% – 3%. As follows from the minutes of the recent RBA meeting, in order to return inflation to the target level, “further interest rate increases will be required over time”, and “further steps are needed in the coming months to normalize monetary conditions in Australia.”

It is worth noting that earlier the minutes of the RBA said that “the Central Bank will not raise rates until it reaches the CPI inflation target of 2-3% on a sustainable basis. It won’t happen before 2024.” It seems that the situation has changed, and now the RBA, like most other major world central banks, is facing the problem of accelerating inflation.

The expected positive value of the indicator is likely to support the AUD. If the indicator comes out with a value worse than the forecast, this will negatively affect the AUD in the short term.

18:00 USD The Fed’s interest rate decision and monetary policy statement. Summary of Economic Projections by the Federal Open Market Committee

In 2020, the dollar was declining because investors were withdrawing funds from safe-haven assets to buy more risky and profitable assets on the stock market, which continued to grow despite the threat of a second wave of the coronavirus epidemic and the associated economic slowdown. The role of the dollar as a defensive asset also declined. However, in 2021 the situation has changed – the dollar has strengthened. Now market participants are waiting for the US central bank to either pause or continue the cycle of tightening monetary policy, but at an even slower pace.

It is expected that at this meeting the rate will be raised by 0.25% to 5.50%, although it is not impossible that at this meeting the Fed will take a break to assess the current conditions in the economy and the labor market.

During the period of publication of the rate decision, volatility can increase sharply throughout the financial market, primarily in the US stock market and in dollar quotes, especially if the rate decision differs from the forecast or unexpected statements are received from the Fed management.

Powell’s comments could affect both short-term and long-term USD trading. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious stance is seen as negative for the USD. Investors want to hear Powell’s opinion on the Fed’s plans for this year.

18:30 USD Press conference of the FOMC (Federal Open Market Committee of the US Federal Reserve)

The press conference of the Federal Open Market Committee of the US Federal Reserve lasts about an hour. The first part reads the ruling, followed by a series of questions and answers that can increase market volatility. Any unexpected statements by Powell on the topic of the Fed’s monetary policy will cause an increase in volatility in dollar quotes and in the US stock market.

Thursday, July 27

12:15 EUR ECB’s decision on interest rates

The ECB will publish its decision on the key rate and on the deposit rate. The ECB’s tight stance on inflation and the level of key interest rates contributes to the strengthening of the euro, while a soft position and rate cuts weaken the euro. Given the high level of inflation in the Eurozone, according to the ECB management, the balance of risks for the economic outlook for the Eurozone “remains skewed to the negative side.”

“The Governing Council believes that interest rates will still need to be increased significantly … in order to ensure a timely return of inflation to a medium-term target of 2%,” the ECB said in a statement following the December meeting.

Speaking at the World Economic Forum in Davos in January 2023, the ECB President Christine Lagarde said that “inflation expectations are not easing” and “the ECB will continue to raise rates.” In her opinion, “inflation is too high”, and “the ECB intends to bring it down to 2% in a timely manner.”

The ECB believes that GDP growth may decline due to the energy crisis in the EU, high uncertainty, weakening global economic activity and tightening financing conditions. However, the recession should not drag on too long, although strong growth is not expected either.

“In the near future, growth will recover as the current headwinds ease. Overall, according to Eurosystem staff forecasts, the economy will grow by 0.5% in 2023, 1.9% in 2024 and 1.8% in 2025.

Thus, if we follow this signal from the head of the ECB, following this meeting, the key interest rate and the ECB deposit rate for commercial banks will be raised again, most likely by 0.25% (up to 4.25% and 3.75%, respectively). But other, tougher solutions are not ruled out (an increase of 0.5% or even 0.75%).

Well, since inflation in the Eurozone is still unacceptably high for the leaders of the ECB, they can announce an increase in interest rates at the next meetings.

Perhaps this will also be mentioned in the accompanying statements of the leaders of the ECB.

12:30 USD Durable goods orders. Capital goods orders (ex defense). US annual GDP for the 2nd quarter (preliminary estimate)

This indicator reflects the value of orders received by producers of durable goods and capital goods (capital goods are durable commodities used to produce durable goods and services) involving large investments. Goods produced in the defense and aviation sectors of the US economy are not included in this indicator. A high result strengthens the USD.

Durable goods orders previous values: +1.8% in May, -0.7% in April, +3.2% in March, -1.0% in February, -4.5% in January 2023, +5.6% in December, -1.7% in November 2022, +0.7%, +0.3%, +0.2%, -0.1%, +2.2% in June, +0.8 % in May, +0.4% in April, +0.6% in March, -1.7% in February, +1.6% in January.

Capital goods orders ex defense previous values: +3.0% in May, +1.3% in April, -0.6% in March, -0.1%, +0.8% in January 2023, -0.1% in December, 0% in November 2022, +0.3% in October, -0.8% in September, +0.8% in August, +0.3% in July, +0.9% in June, +0.6% in May, +0.3% in April, +1.1% in March, -0.3% in February, +1.3% in January.

In theory, the relative growth of the indicator has a positive impact on the dollar, and the decline of the indicator is negative. The market reaction to its negative value may also be negative for the dollar in the short term. Data worse than the previous value and/or the forecast will also have a negative impact on dollar quotes.

Better-than-expected data will have a positive impact on the dollar.

Forecast for June: +1.0% and 0%, respectively.

GDP data is one of the key indicators (along with data on the labor market and inflation) for the Fed in terms of its monetary policy. Strong result strengthens US dollar; a weak report on GDP has a negative impact on the US dollar. In the previous Q1 2023, GDP grew by +2.0%, after +2.6% growth, +3.2% in Q3, falling by -0.6% in Q2, -1.6% in Q1, +6.9% growth in Q4 2021, +2.3% in Q3, in Q2 GDP grew by +6.7%, in Q1 2021 – by +6.3%.

If the data points to a decline in GDP in the 2nd quarter of 2023, the dollar will come under strong pressure. Positive data on GDP will support the dollar and US stock indices.

Forecast (preliminary estimate): +1.6%.

12:45 EUR Press conference of the ECB. Monetary Policy Statement

The press conference will be of major interest to market participants. In its course, a surge in volatility is possible not only in euro quotes, but also in the entire financial market, if the ECB leaders make unexpected statements. The ECB leaders will assess the current economic situation in the Eurozone and comment on the bank’s decision on rates. In previous years, as a result of some meetings of the ECB and subsequent press conferences, the euro exchange rate changed by 3% -5% in a short time.

The soft tone of statements will have a negative impact on the euro. And, on the contrary, the tough tone of the speech of the ECB management regarding the monetary policy of the central bank will strengthen the euro.

23:30 JPY Consumer Price Index (CPI) in the Tokyo region. Tokyo Core Consumer Price Index (Core CPI) (ex food and energy prices)

The Tokyo Consumer Price Indices are published by the Japan Bureau of Statistics and measure the change in prices of a selected basket of goods and services over a given period. They are a key indicator for assessing inflation and changing consumer preferences.

Previous values (in annual terms):

     Tokyo CPI: +3.1%, +3.2%, +3.5%, +3.3%, +3.4%, +4.4% (in January 2023),     Tokyo CPI (ex food and energy): +3.8%, +3.9%, +3.8%, +3.4%, +3.1%, +3.0% (in January 2023).

Forecast for July: +2.8%, +2.9%, respectively.

The indicator value below the forecast and/or previous values may trigger the weakening of the yen.

Friday, July 28

01:30 AUDRetail sales index

The Retail Sales Level Index is published monthly by the Australian Bureau of Statistics and measures total retail sales. The index is often considered an indicator of consumer confidence and reflects the state of the retail sector in the short term. The growth of the index is usually a positive factor for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (for May) +0.7% (after 0%, +0.4%, +0.2%, +1.9%, -3.9%, +1.7%, +0.4%, +0.6%, +0.6%, +1.3%, +0.2% in previous months). If the data turns out to be weaker than the previous value, then the AUD may drop sharply in the short term, but if it’s above the previous values, the AUD is likely to strengthen.

After 02:00 (exact time unknown): JPY Bank of Japan’s interest rate decision. Bank of Japan’s press conference and monetary policy statement

The Bank of Japan will decide on the interest rate. At the moment, the main rate in Japan is in negative territory at -0.1%. Most likely, the rate will remain at the same level. If it is cut and deepens into negative territory, such a decision will cause a sharp decline in the yen on the foreign exchange market and an increase in the Japanese stock market. In any case, a jump in volatility in the quotations of the yen and in the Asian financial market is expected during this period of time.

Since February 2016, the Bank of Japan has kept the deposit rate at -0.1%. The yield target for 10-year bonds is currently in the 0% region. One of the recent accompanying statements from the Bank of Japan said that the management of the bank will continue to “increase the monetary base until inflation is stable above 2%.” “We will not hesitate to take additional easing measures if necessary,” the bank also traditionally said in a statement.

During the press conference, head of the Bank of Japan Kazuo Ueda will comment on the bank’s monetary policy. The Bank of Japan continues to adhere to its ultra-soft monetary policy. As former head of the Japanese Central Bank Haruhiko Kuroda has repeatedly stated earlier, “it is appropriate for Japan to patiently continue the current loose monetary policy.” Markets usually react actively to the speeches of the head of the Bank of Japan. He will surely touch upon the topic of monetary policy during his speech, which will cause an increase in volatility not only in yen trading, but throughout the Asian and global financial markets.

If bank officials decide that the Japanese economy is stable and inflation momentum towards the 2% target is not diminishing, they will refrain from changing policy.

After 05:00 (exact time unknown): JPY Bank of Japan’s press conference

During the press conference, head of the Bank of Japan Kazuo Ueda, who replaced Haruhiko Kuroda in this post in April 2023, will comment on the bank’s monetary policy. Despite earlier measures taken by the bank to stimulate the Japanese economy, inflation remains low, production and consumption are falling, which negatively affects export-oriented Japanese manufacturers. Markets usually react actively to the speeches of the head of the Japanese Central Bank. If he touches on the topic of monetary policy during his speech, volatility will increase not only in trading in the yen, but throughout the Asian and global financial markets.

12:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany (preliminary release)

This index is published by the EU Statistics Office and is calculated on the basis of a statistical method agreed between all EU countries. It is an indicator for assessing inflation and is used by the Governing Council of the ECB to assess the level of price stability. A positive result strengthens the EUR, a negative result weakens it.

Previous indicator values: +6.4% in June, +6.3% in May, +7.6% in April, +7.8% in March, +9.3% in February, +9.2% in January, +9.6% in December, +11.3% in November, +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May , +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022 (YoY). If the July data turns out to be better than the previous values, the euro may strengthen in the short term. The growth of the indicator is a positive factor for the euro. The data suggests mounting inflationary pressures in Germany, which in turn is putting pressure on the ECB to tighten its monetary policy. Data worse than the previous value will have a negative impact on the euro.

Price chart of EURUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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